What tax do you pay if you sell on eBay?
All of us have probably sold or at least bought something second hand on eBay. For some, it is your main source of income. Paying tax on eBay (or ‘eBay tax’) isn’t something we think about when listing our second hand stuff like clothes, furniture, or antiques. Keep in mind that your eBay profits may not be tax free.
What is eBay tax?
eBay tax is not a thing in the UK. However, there might be some tax implications for selling on eBay. The more you sell, the more likely HMRC will consider you as a business and that you are doing so to make a profit. If profits are the goal, not just selling some old stuff, this needs to be declared.
Profits are more clear cut when you either make or buy goods specifically to sell on eBay, but it's important to also keep this in mind if you’re selling second-hand stuff.
How much tax do I owe on my eBay sales?
The tax that you owe on eBay profits depends on how much profit you make. If you sell up £1,000 a year in eBay sales this is completely tax-free with the Trading Allowance. The Trading Allowance enables you to earn self-employment profits tax-free, not to be confused with the Personal Allowance which is the tax-free portion of your full-time earnings. The Personal Allowance currently sits at £12,570 for the 2022/23 tax year.
When do I owe Capital Gains Tax (CGT)?
If you’re selling second-hand personal items of that have a significant value on eBay (maybe some family heirlooms), you might be liable to pay CGT. Any personal possessions that you sell (with the exception of your car) that are worth more than £6,000, you’ll need to pay Capital Gains Tax.
The good news is that if you do sell something worth more than £6,000 such as jewellery or a painting, you only pay CGT on the profit i.e. anything over £6,000.
What happens if I don’t declare my eBay earnings?
The important factor here is whether or not HMRC considers you to be ‘trading’. If you sell low-value items very occasionally, you’ll be ok not to declare your earnings. But as you start to approach the £1,000 tax-free threshold, you should consider filling out a Self Assessment.
Make sure you don't get surprised when HMRC knocks on your door.